Pearson BTEC Level 5: Planning for Growth Finance Report Analysis

This report, titled "Planning for Growth," analyzes various sources of finance for a hypothetical bakery, Bubbly Bakery. It begins by examining the importance of finance for business operations and then delves into two primary sources: own capital and shares/debentures, outlining the advantages and disadvantages of each. The report further investigates financing options for a specific event, an afternoon tea for local dignitaries, recommending bank loans and retained earnings as suitable sources. The report highlights the benefits of loans for immediate funding and the advantages of retained earnings for cost-effectiveness. The report concludes with a list of references, including books and journals that support the analysis. The report covers key financial concepts such as own capital, shares, debentures, bank loans, and retained earnings in the context of a business's growth plan. The report is designed to provide students with a practical understanding of financial planning and resource management.

42- PLANNING FOR
GROWTH

Table of Contents
Table of Contents.............................................................................................................................2
MAIN BODY...................................................................................................................................3
Task 1 (A)...................................................................................................................................3
Task 1 (B)....................................................................................................................................3
REFERENCES................................................................................................................................5

MAIN BODY
Task 1 (A)
Money or the finance is the only thing without which the company cannot run as in every
activity of the business the money is required (Ali and Khalid, 2019). Thus, for this the most
essential thing is the analysis of the sources of finance that is from where the bakery can get
good amount of finance at low rate. The various sources of finance available for the Bubbly-
bakery. Com is as follows-
Own capital- this is the most important and the cheapest source of finance in the business
world. This is majorly because of the reason that in own capital the owner of the company brings
their own finance and due to this reason this is the cheapest source of finance.
Advantages
The major advantage of using this source of finance is that there is no extra cost added to use this
money like in case of other sources that is interest.
Disadvantage
The major drawback of this source of finance is that if the business fails then all the money is
lost by the owner.
Shares and debentures- this is another major type of source of finance in which the
company list its shares for the public to purchase it and this provide them the ownership in the
company. This is also a good source of finance as it assists the company in getting money from
the public and in return the interest and dividend is paid to the shareholders.
Advantages
The major advantage of this is that dividend to the equity shareholders is payable only in case the
company earns a profit and not in case of loss (Amornkitvikai and Harvie, 2018).
Disadvantage
The major drawback of using the equity share capital financing is that this provides all the
control in the hands of shareholders as they have invested the money in the company.
Task 1 (B)
For the organizing of the event of afternoon tea for local dignitaries the source of finance for this
event by Bubbly- Bakery. Com is as follows-

 Loan from bank and financial institution- this is the most common type of source of
finance which is advisable to bakery for organizing of the event. This is majorly because
of the reason that this is easily available and not much cost is involved in arranging this
source of finance. Another major reason for the use of the loan from bank is that this will
assist the bakery in getting instant money and in against of this they will have to pay
interest (Balaban, Župljanin and Ivanović, 2016).
 Retained earnings- this is also very good source of finance as this is the money which is
being saved by the business during the whole business life. This is the cheapest source of
finance as this will assist the company in managing the event and organizing in proper
and effective manner as this will assist the company in using the finance without paying
any of the interest or dividend as which is in other cases. Thus, it can be said that the
retained earnings is also a very cheap and easy source of finance which is easily available
to the company.

REFERENCES
Books and Journals
Ali, K. and Khalid, M., 2019. Sources to finance fiscal deficit and their impact on inflation: A
case study of Pakistan. The Pakistan Development Review. 58(1). pp.27-43.
Amornkitvikai, Y. and Harvie, C., 2018. Sources of finance and export performance: Evidence
from Thai manufacturing SMEs. The Singapore Economic Review. 63(01). pp.83-109.
Balaban, M., Župljanin, S. and Ivanović, P., 2016. Sources of Finance for Entrepreneurship
Development. Economic Analysis. 49(1-2). pp.48-58.